June 8, 2022
If someone asked if you’d rather pay taxes now or later, what would you say?
Paying later is tempting. After all, who likes paying taxes at all? As with most inconveniences, it’s easy to delay, delay, delay.
But here’s an important question. When do you think taxes will be greater—today, or years from now?
It’s impossible to answer.
Looking to history doesn’t really help—income taxes are actually far lower now than they were in the 1930s, 40s, or 50s.¹ So if you pay now, you may miss out if taxes sink even further.
But no one can predict the future. If you opt to pay later, unforeseen circumstances may create a higher tax environment down the road.
So if you’re comparing tax now vs. tax later, it may feel like you might as well toss a coin to determine your strategy. Not a good place to be!
But fortunately, there’s an alternative. Tax never.
And no, that doesn’t mean buying shady nail salons, opening businesses in the Cayman Islands, or committing a felony. It simply means working with a licensed and qualified financial professional to identify time-proven—and 100% legal—financial vehicles.
Roth IRAs/Roth 401(k)s Health Savings Accounts Indexed Universal Life (IUL) Insurance 529 College Savings Plans Municipal Bonds
Each vehicle has specific rules, limitations, strengths, and weaknesses. It’s absolutely critical that you consult with a financial professional before you start leveraging these tools. Remember, you don’t need to flip a coin to make financial decisions!
¹ “History of Federal Income Tax Rates: 1913 – 2021,” Bradford Tax Institute, https://bradfordtaxinstitute.com/Free_Resources/Federal-Income-Tax-Rates.aspx